Few activities are more dynamic than the field of supply chain management. A typical day may include considering the impact of overseas conflicts, accounting for local weather issues, tracking down shipments scheduled for arrival, reviewing maintenance schedules for dedicated fleets, and still trying to meet the everyday needs of the business. Yes, there will always be disruption and various challenges that lead to downstream problems. Need proof? Well, consider that according to SMB Guide, "The Red Sea shipping crisis affects 30% of global container trade." While your current shipment may seem removed from the Middle East, that delay leads to issues in planning equipment use. Eventually, those obstacles become your problems, too. Identifying these challenges before contributing to a real disruption in your supply chain is crucial for implementing effective solutions.
Imagine trying to figure out how to find coverage for a load when your allocated truck is sitting in the shop and literally unable to roll. One IL2000 client experienced a similar problem first-hand. Without visibility into the actual issues plaguing this plastics manufacturer, the problem only became evident when the load was tendered for the fleet. Something had to give. But with a management-by-exception approach, the idea is to eliminate the risk, ergo ditching the hassle of dedicated fleet maintenance in the first place.
With our team, the client “found a way to leverage IL2000’s around-the-clock managed transportation services to completely eliminate the company’s reliance on a dedicated fleet within a reasonable timeframe.”
Let’s take a look at management by exception and its implications for your supply chain strategy.
Common disruptions you can anticipate
Inconsistent supply and demand patterns often lead to overstocking or stockouts, disrupting the supply chain and reducing efficiency. Delays and bottlenecks in logistics, caused by unforeseen events or inefficient processes, further compound these issues. Inefficient inventory management can result in higher holding costs and missed sales opportunities. Lastly, the lack of real-time data and visibility makes it difficult to respond promptly to disruptions, leading to prolonged inefficiencies. These are almost always inevitable, but what if you could have a plan in place for them before they actually happen?
The Solution: Management by exception
Management by exception is a strategic approach that identifies and addresses significant deviations in supply chain processes. This method allows businesses to streamline operations by prioritizing critical tasks and mitigating risks.
Management by exception involves monitoring key performance indicators (KPIs) and only intervening when significant deviations from expected outcomes occur. This approach ensures that management resources are focused on areas that need the most attention, thus improving overall operational efficiency.
Leveraging advanced analytics, within our tech stack, helps in quickly and accurately identifying deviations from the norm. Predictive intelligence tools can forecast potential issues before they become critical, allowing for timely intervention. Employing real-time data ensures that exceptions are identified and addressed promptly. This immediate insight allows for quicker decision-making and more effective rerouting of shipments.
Here’s another example from our client success stories.
A food packaging company was experiencing issues in getting packaging products to food production facilities at the just-right time, pardon our play on just-in-time (JIT) delivery. The end user needed a proverbial guarantee of delivery in pristine condition–adhering to strict food packaging requirements. That meant recognizing when something was going wrong and building out a plan to intervene before it resulted in a missed delivery to the production facility.
IL2000 took our advanced BI dashboards with JIT status updates that refreshed every two hours to the client. The analytics behind the system created an effective means of management by exception through automated notifications of every load. If something went awry, our expert team could swoop into action and help our client implement a solution before it led to an angry production line.
Benefits of implementing management by exception
Businesses enhance operational efficiency and maintain smooth supply chain operations through a plan for every possibility. They prioritize critical tasks, which reduces time spent on minor issues and allows for better resource allocation. This streamlined focus on significant deviations helps improve overall efficiency.
Real-time monitoring and data analytics enable visibility into the supply chain and facilitate timely decision-making. This enhanced freight service tier ensures that all stakeholders are informed and can respond quickly to any issues.
Let’s consider an example. Everything seems on track, but then the humidity changes at the port. Combined with smoke from wildfires burning in the Midwest, an unusual haze sets in. The haze gets worse due to the thickening of clouds in the atmosphere, and bam, your well-planned port pickup is delayed because a collision resulted in damage to the port gate.
Quickly identifying and addressing significant deviations in the weather patterns at a given port leads to faster resolution of issues and minimizes disruptions. You cannot intervene in this one situation unless the port has a different gate, but you could divert planned pickups to another location, shifting your schedule and avoiding sitting at the port idle. It’s all dependent on whether you have a contingency plan.
Automated alerts from the ports or even your own TMS can immediately notify relevant stakeholders, i.e. downstream workers at your warehouse, allowing for swift action. Proactive exception management improves customer service by ensuring timely deliveries and minimizing shipment delays. This approach helps in maintaining high levels of customer satisfaction and trust. Plus, you can avoid wasting resources associated with planning for arrivals that are never going to make it according to your schedule.
How IL2000 implements management by exception
IL2000 utilizes the management by exception approach to streamline supply chain processes, ensuring optimal performance and productivity.
Our team focuses on significant deviations and addresses them proactively to maintain smooth operations. This approach ensures that potential disruptions are managed before they escalate into larger issues. Leveraging advanced analytics and real-time data, IL2000 prioritizes critical tasks and ensures quick resolution of issues. Predictive intelligence tools help forecast potential disruptions, allowing for timely interventions. But analytics can’t work within a vacuum. The insights gained from all these differing algorithms can be used in retrospect, especially when looking into the final stages of freight audit and payment.
Let’s consider another IL2000 client example. A plastics company had a prior engagement with a 3PL that simply couldn’t meet their needs, especially for freight claims. The 3PL promised the world, yet things continually fell by the wayside. Further, the client’s systems could not function properly due to an outdated API.
Using our industry-leading expertise, IL2000 stepped in and updated the API with our industry-leading expertise. The client could then use accurate data to address the claims backlog and ensure that stakeholders would be notified of any deviations that occurred in billing. The IL2000 team addressed the issue before the statute of limitations expired, saving up to $1 million annually.
Utilizing a combined people, process, and technology approach, IL2000 effectively predicts and manages potential disruptions. These solutions provide deeper insights into supply chain operations, enabling more accurate and timely decision-making. IL2000 also implements automated alerts and communication tools to keep stakeholders informed. These tools ensure that all relevant parties are aware of significant deviations and can take prompt action to address them.
Practical steps to implement management by exception
Certain practical steps can help streamline the implementation process for shippers looking to adopt management by exception in their supply chains. These include:
- Determine the critical KPIs that need monitoring to identify significant deviations. These indicators should be aligned with the overall goals of the supply chain operations.
- Deploy advanced analytics to monitor KPIs and detect deviations early. Predictive intelligence tools can provide insights into potential issues, allowing for proactive management.
- Incorporate real-time data to ensure timely responses to exceptions. This data provides immediate visibility into the supply chain, enabling quicker decision-making.
- Configure automated alerts to notify relevant stakeholders about significant deviations. These alerts ensure that all parties are informed and can take prompt action to resolve issues.
- Ensure your team is well-trained in using exception management tools and responding to alerts. Proper training ensures that the team can effectively manage exceptions and maintain smooth transportation management services operations.
Boost your supply chain efficiency with IL2000
It’s time to stop living in a reactive world and get in the fast lane to success with management by exception. With our expertise in comprehensive logistics solutions, predictive intelligence, and advanced analytics, we can help you achieve optimal operational efficiency and superior customer service. Connect with an IL2000 managed trans expert to get started.